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I have to appologize for not posting earlier. The AVID trade was exited by my stop-loss contingency order. The account has been suffering lately. We made have exited BBY wisely, but the AVID trade took a great deal of the profits from that succesful trade.
Here is the chart of FDX, with a target of $90 to $100/share. It looks like a good trade to me. We could wait for a short-term pull-back. I will be guided by the 60 min chart.
Not only is the Elliott count quite bullish, so are the oscillator and the fundamental outlook for the company. We will soon find out if the strength in the stock is enough to carry it over the March high.
There are other candidates to consider today. SGR, has once again trigger my system, how long can we ignore it? LEN was forced to reveal its good earnings (go figure) this is an unusual, and bullish move, IMHO. DBD looks oversold right now, but I expect it to continue on its way down sooner of later. How to figure it out? Just look at RRGB. The stock went sideways for a little while, never exceeding the 38.2% bounce before collapsing. The name of the came for bear trades is patience. We will wait with our Fibonacci estimates in place.
15 comments:
Why FDX?
One of your favourite stock. Why?
If BBY is over sold, why not do the reverse and buy the Calls.
I've had a look at the Risk Graph on Platinum and you can't get the BE line to be in your favour when you open the trade, unlike some of the others.
What is your projection for FDX?
Please don't let me put you off, just questioning.
I decided that I have been successful with my Sarmiento System, why change that? To get back on BBY on the bullish side, I would have to see a 5% increase in stock price with a doubling in average volume, the fundamental changes to go with it and a good Elliott wave profile. FDX has all that. I will continue my post later. My trade on FDX did not fill, and I think that I'd be OK if I enter at a 38.2% pullback from the bounce.... Well see.
BTW, look at DBD too on the bear side. I will wait for a bounce of 38.2% on that too. The fundamentals look bad on this one...
Juan,
RE: “I decided that I have been successful with my Sarmiento System, why change that?”
I can’t argue with it. To be honest I am having problems with my downloader for the info to use in Metastock.. Well that is my excuse!!!
RE: “To get back on BBY on the bullish side, I would have to see a 5% increase in stock price with a doubling in average volume, the fundamental changes to go with it and a good Elliott wave profile. FDX has all that. I will continue my post later. My trade on FDX did not fill, and I think that I'd be OK if I enter at a 38.2% pullback from the bounce.... Well see.”
Interesting observations. Thanks for the evaluation.
RE: “BTW, look at DBD too on the bear side. I will wait for a bounce of 38.2% on that too. The fundamentals look bad on this one...”
Will do in the morning, it is currently 11:42pm here in the UK……
It would be interesting to see the projections for FDX and DBD please. Thanks again.
I have semi-sorted out my downloader problem this morning on Metastock and have created a List of stocks you have mentioned.
Firstly DBD. This looks very interesting. I have C&P the Motley Fool observation;
“Eric Evans, formerly the president and chief operating officer, has quit and the CEO has assumed his duties. Frankly, I have no idea whether he's being made to take the blame for the poor performance or whether he's escaping what he believes is a bad situation.
In the wake of all this, the company is also restructuring the business (again). With the new order in place, there will be a single financial services unit combining product/software development, manufacturing, procurement, and marketing functions. I must say that I'm skeptical here -- this is a company that seems to love to have restructuring charges in the mix, and it looks like this sort of move is going to lead to more of them.
There's no way I'm touching this stock. Earnings quality is suspect, there has been a parade of excuses that predates my time at The Motley Fool, and the company frankly just isn't getting the job done. Maybe this will morph into a turnaround story, but with thousands of other stocks to choose from, I see no reason to extend yourself at this point.”
Great news story, because it looks as if it will go down further. However, now the bad news is out of the way, it could slip further if it does not rally up. The problem for the southerly direction is the lowest strikes are currently $40. Whether they will create lower strikes remains to be seen. I assume they will. However, it could be oversold….
It perhaps needs to be watched to confirm the continuation of this downward trend. Currently if you were to enter Sell 1 Oct05 $40 Put and buy 2 Feb06 $40 Put, shaving at about $485 entry.
With regards to FDX. It looks as if it will continue upwards, but confirmation of the trend is always helpful.
Selling the Nov05 instead of Oct05 reduces the entry cost, but also reduces the delta. So sell 1 $85 Oct05 Call and buy 2 Jan06 $85 Calls for a total debit of $595 after ‘shaving’.
On DBD an entry of;
SEll 1 Oct05 $35
BUY 2 Feb06 $35
Entry of $3.30
I am in at $3.10 for at the $35 strike selling two of the short month Oct05 and buying four of the back month Feb06.
AMLN is taking its time to move up, but still has the potential to make the move up.
Juan,
I have had a closer look at AMLN. Understand I haven’t got Elliott Wave, but I am looking at Metastock and the ADX is above 40, a sign perhaps of the end of the trend, but I am also getting a Williams %R oscillator that is oversold. The later reason for indicating to you that it was looking good from the support line of approx. $30.
What I am also seeing here is a Bollinger Band squeeze, so this could move either way, but I am hoping up. Your opinion please.
I took a chance on the DBD trade, and got in at $3.10. Watching the trade on IB, I can see that the Feb06 is probably one month too far out and is not as responsive as it might have been with the Jan06. Perhaps also I should have waited for volatility to calm slightly. Certainly the ‘fai trade’ price on Platinum suggests I paid a few dollars more than I should have.
FDX, wish I had entered yesterday, but there could be a slight pull back tomorrow. I am just guessing here from observing previous ticks, of up movement. Nothing more.
I hope this is the type of feedback you are after. Thanks again. Keep up the good work.
THE AVID trade was exited today, as the stock declined strongly. Ironically, it was probably the bottom. Oh, well. it seems like you win some and you loss some. As long as you don't get overexposed, and use those stop loss, you can rebound.
The result is that I have now enough cash to get into the FDX and DBD trades. I am waiting or a good pull back before entering either trade. I might increase my AMLN position too, just because it was a limited position when I entered. I have to wait for a buy signal on AMLN.....
Since we are buying options it is a two phased race.
1) Elliot wave is good to identify stock price, but not the timing
2)Volatility can kill the money you make even though you were right with the direction.
For SGR it is up again because of Hurricane Rita... Cramer thinks SGR is not the best of the breed. Not sure this is good enough catalyst to consider.
I am not convinced on AMLN, but I FDX and DBD trades
Varun,
RE: “Volatility can kill the money you make even though you were right with the direction.”
It with those thoughts that I posted that on reflection, the ‘model prices’ in Platinum suggest that I have perhaps overpaid. In saying that I believe I got the best price I could on that day considering circumstsnces. Watch I was watching was ‘responsive drawback’ into the mid range trading range for that day, to get the best price.
Anyway mistakes on timing make interesting reading as well the successes.
How is the OTM Fly comparison doing you mentioned previously?
Juan,
Observing LEN using some of the Metastock indicators;
MESA Sine Wave Indicator is about to turn up from a low, Good signal. The Sine wave has not crossed the lead Sine Wave, which would be a buy signal. But is at its low and is turning.
DI+ (14) is at 15 (22/9/05), up from the low of 13 the previous day (21/9/05), with DI- (14) coming down sharply from a value of 46 to 36. Strictly speaking this is not a buy signal but perhaps suggests an ‘intention’ to buy.
While the stock has been coming down, ADX (14) has interestingly going up. On the 15th and 16th ADX (14) was at its low of 18. It crossed 20 on the 20th Sept the day of the large price fall of LEN ($59 to $54) and currently ADX(14) is at 24. This suggests a trend up.
Perhaps upwards?
However, Williams%R is mid range suggesting no over buying or over selling.
Varum
Elliott wave theory can be excellent for timing, if you are selecive. If a stock has made a significant low, and then jumps in strong volume, you have the best trade. Take a look at the AMLN chart as an example. That is the ideal situation.
For those of you who have asked me about the RET elliott wave software, look at my articles on it. If you are serious about Ellliott wave, and have the money to invest in this software, I would recommend it. At the very least, you can choose among various patterns the once that have the highest ranking and match your views. Further, it does consider all possible elliott patterns, not just 1-2-3-4-5 and a-b-c, like A-Get. Elliottician has offered free stock and Forex courses that may be useful to test drive the software before actually buying. This is not for everyone and it take effort to learn and apply.
About SGR and Cramer...
AMLN certainly was not a best of breed, compared to AMGN and DNA. My system is not necesarily based in "best of breed". It could be a short-term move only. We are looking to grow a 10K account as soon as we can.
I also choose stocks that trade at >1M shares in average volume to avoid iliquid stocks that can suffer the volatility crush. Still, it is hard not to feel guilty when a stock you identify as a good opportunity jumps in the right direction, but you had to avoid due to the large spread. Take RRGB and SGR!
Yesterday's best candidates were LEN, BBBY, RAD and SGR. Take a look at their catalyst, and see which one is worth looking into further. For me, preannouncements, positive or negative are strong catalysts. LEN actually preannounced good earnings. Good move!
Excellent comments from both of you.
Fortitude,
Take a look at the blog area comment you put OTM fly as well. I commented on that few days back.
Anyway, here is my take again. OTM Butterfly has a good Reward to Risk Ratio, but the expectancy is low. You need to buy more contracts to get the appropriate greeks.
Juan, does it with stop loss orders, but with OTM fly you should be willing to loose all your debits you put in.
Once again it is a personal choice. I prefer Juan's method, because he is trying to make money faster. OTM is good if you are patient.
Juan,
1) How do you define significant low? Are you using Stochastics to identify?
2)Thanks for your comments on Elliotician. Did you also do the advanced course as well?
Once again thanks for the comments
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